Option strategy to capture the next big move in the market

It appears that volatility will be the name of the game going forward. The Vix appears to be headed upwards in the short term. If volatility was to surge upwards implied volatility on options would do the same. On the daily chart the S and P 500 looks set to break out of a coiled spring like formation out of its recent trading rage between 2040 and 2120.  A strangle strategy would help in capturing this as earnings season begins.
Current S and P 500 spot - 2076


Looking at options prices on the CBOE expiring April 30:
2070 puts are available near $25
2080 calls are available near $24
Break even points - 2021, 2129
make money - below 2021 or above 2129
loose money - between 2021 and 2129.

It is note worthy that several asset classes are on the verge of breakouts from their recent trading ranges and such a strategy could be extended to them. In the commodity space gold, copper and crude stand out:



In the forex space the Japanese Yen crosses particularly EUR/JPY, AUD/JPY and GBP/JPY stand out:

Option Trading Strategy Indian Market

I expect the market to be volatile leading up to and beyond the RBI meeting on Tuesday the 7 th. It is best to be two sided in this market. The 20 DMA has crossed below the 50 DMA on the Nifty so short term bias maybe to the downside. Regardless a two way strangle seems to offer good value.

Nifty - Current Spot - 8594
Nifty 8400 Put - 51
Nifty 8800 Call - 44


You can buy the above two options for a combined premium of 95. The break even occurs at 8305 and 8895. If market stays between the break even points you lose 95X 25 (per nifty lot) at expiry. I expect a big move in the market post the RBI decision that will cause a break out of this trading range.

As of Market close on April 10:
Nifty - Current Spot - 8780
Nifty 8400 Put - 19
Nifty 8800 Call - 104
Profit = 30%

Nifty Gold Uptrend in Question

The Nifty has been in a continuous uptrend against gold (in dollars). Gold has been falling on deflationary fears. As the deflationary theme plays out and eventually spreads to risky assets like stocks a catch up to the downside is likely for stock market indices like the Nifty. A pull back thus seems to appear on the charts with Nifty under performance vis a vis gold in a deflationary context.Chart courtesy StockCharts.com.